0% doesn't always mean 0%

[AchingBack]

Overall, it appears Mahindra is doing the most it possibly can to get people into a tractor. Some folks are limited as to how much they can pay per month. The plans seem to offer ample options to make it possible. It is up to each of us to scrutinize contracts before signing. If the buyer feels something is awry, they should have a friend, or attorney look it over first.

 

[DavesTractor]

I'm a dealer for a brand other than Mahindra, but I believe the idea of dealers playing pricing games is being overstated. The dealer has no control over finance and rebate options. These come directly from the manufacturer, and the dealer must sell equipment within the program paramaters setforth.

As a Kubota dealer, we have a $0 down/ 0% interest program or a cash rebate. We can argue from every angle about wether this is a true 0% program or not, but at the end of the day those are the options given to us by Kubota (insert any manufacturer here).

There was a time when Kubota provided no rebate for cash, and many cash buyers complained. Now they have a cash rebate, and others complain that it now means 0% ins't a true 0%. Pleasing one contingency upsets another, and vice versa.

I can't imagine a reality where a finance company hires a full staff, pays them nothing, and risks money on loans for no financial return whatsover. That's what a "true 0%" from a finance company would look like.

Well said, thanks Spencer.

 

[ACDNate]

Let me preface my comments by saying I haven't bought a tractor but am researching and shopping around. The advertised pricing differences based on financing did throw me for a loop, much like the original poster.

The big difference I'm seeing here between what's being said about tractor financing and auto financing is presentation. If you go into a dealership looking for a car during a 0% financing special, there won't be much discussion about the 0% financing till things are wrapping up. Dealerships build those financing costs into your price w/o highlighting it like the tractor dealers apparently do.

It's all perception of the customer. If dealers treated every deal as a 0% financing deal when negotiating price and didn't drop the bigger discounts until a cash sale was clearly specified this topic wouldn't ever come up.

 

[Ram4x4]

I can't imagine a reality where a finance company hires a full staff, pays them nothing, and risks money on loans for no financial return whatsover. That's what a "true 0%" from a finance company would look like.

Then it's really simple, don't advertise a 0% interest program if it isn't 0%.

How hard is that?

I understand dealers hands are tied when the company dictates it, my argument is in general, if it's the company then it's the company, but I know for a fact that some dealers are taking advantage of the situation to mark things up even more...which only adds further to the skeptical eye that many buyers have.

I agree SOME of it has to do with how a dealer communicates the price. If I ask for the price of the tractor and he tells me "$25,000 cash" then to me, that is the price, period. As soon as I say finance it he now has to back pedal and explain how or why the price is going to be higher. that isn't winning any customers.

What he should do is tell me the price of the tractor as it sits, before any rebates, cash incentives or any other hullabulla names you want to apply to it.

He should then tell me what the interest rates are for financing it over the various range of months (but the price should not go up!)

Then he should tell me, however if you pay cash, the price will be discounted X$$$.

Then, if he tells me there is a 0% interest for 60 months program, the price SHOULD STILL BE THE SAME as it was initially quoted.

I'm betting few people, if any actually pay cash for something like a tractor. To start off quoting the cash price, including all incentives and NOT tell the customer that price includes those incentives is not a good way to gain their confidence, primarily because you are now going to have to explain a higher price when/if they want to talk financing.

And whatever you do, do not tell someone you have 0% interest and then quote them an even higher price if they choose that option...and then expect them to pay that interest up front in cash!

 

[rockshaft]

X2
It may or may not be the norm- but its false advertising any way you look at it in my book.

Then it's really simple, don't advertise a 0% interest program if it isn't 0%.

How hard is that?

I understand dealers hands are tied when the company dictates it, my argument is in general, if it's the company then it's the company, but I know for a fact that some dealers are taking advantage of the situation to mark things up even more...which only adds further to the skeptical eye that many buyers have.

I agree SOME of it has to do with how a dealer communicates the price. If I ask for the price of the tractor and he tells me "$25,000 cash" then to me, that is the price, period. As soon as I say finance it he now has to back pedal and explain how or why the price is going to be higher. that isn't winning any customers.

What he should do is tell me the price of the tractor as it sits, before any rebates, cash incentives or any other hullabulla names you want to apply to it.

He should then tell me what the interest rates are for financing it over the various range of months (but the price should not go up!)

Then he should tell me, however if you pay cash, the price will be discounted X$$$.

Then, if he tells me there is a 0% interest for 60 months program, the price SHOULD STILL BE THE SAME as it was initially quoted.

I'm betting few people, if any actually pay cash for something like a tractor. To start off quoting the cash price, including all incentives and NOT tell the customer that price includes those incentives is not a good way to gain their confidence, primarily because you are now going to have to explain a higher price when/if they want to talk financing.

And whatever you do, do not tell someone you have 0% interest and then quote them an even higher price if they choose that option...and then expect them to pay that interest up front in cash!

 

[BungeeII]

0% never means 0% if you think it means that a lender isn't going to make money. Every manufacturer has incentives.... there's 8 pages of people acknowledging that. 0% is an incentive for one buyer. Cash, out-the-door, bottom-dollar pricing is incentive for another. Very rarely will you see all incentives bundled into one, glorious transaction. That's one of the reasons "buying/pricing" forums are so popular.

I bet the guys here could all come up with a "remember when" story... like the Bobcat CT230's or whatever they were a couple years ago. It just doesn't happen with regularity.

Maybe you don't get the number of furniture ads we do around here.... Between sales tax, interest, overstock, delivery and every other reduction they try to draw people in with... Nothing is free. You might get a couch with free delivery, no sales tax, free removal of the old couch, no interest for 4 years, all while on sale @ 50% off for a grand total of $500. What you really got, though, was a $200 couch with a whole lot of advertising.

 

[rockshaft]

If the lender is an arm of the manufacturing company- it could be good for business to sell more machines. Its a marketing tool, and there is absolutely no reason to piss off even one customer by using any marketing tool.

 

[Ram4x4]

0% never means 0% if you think it means that a lender isn't going to make money. Every manufacturer has incentives.... there's 8 pages of people acknowledging that. 0% is an incentive for one buyer. Cash, out-the-door, bottom-dollar pricing is incentive for another. Very rarely will you see all incentives bundled into one, glorious transaction. That's one of the reasons "buying/pricing" forums are so popular.

Well, interest is how a lender makes money, isn't it?

If you advertise 0% then that tells me you, as the lender are making 0 dollars on the loan. If the lender is an arm of the same company, guess what? The company still makes money on the sale of the tractor, right?

I have seen real 0% interest deals on other items. The company still makes money on the item when sold.

I worked part-time at Home Depot a number of years ago to finance the purchase of my woodworking tools. I spent some time in the shipping and receiving department. What an eye opener. Most people don't know that these places make very little profit on the big, expensive items, like mowers, etc, but they soak you on the mark-up of the small items like nuts and bolts, light bulbs, small hand tools, etc. It was not uncommon for them to put items on sale at or even below their cost just to get you in the store because they figured while you were there you'd spend money on other items.

The bottom line is simple. You can call it what you want. You can make excuses and talk about "reality" but advertising 0% interest when it is not truly 0% is false advertising. People, i.e. potential customers, aren't stupid. I dare say a lot of people aren't or would not be happy with such a "deal".

As for incentives, that's great, but that isn't the issue with advertised "0%" programs.

Anyway, this horse has been beaten to death. I've had my say. I don't expect anything will change from the dealer or company end.

 

[droptop]

It's safer to beat dead horses, they don't kick or bite.:laughing:

 

[Ram4x4]

Heheheh, true!